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H2 Management of Business > Business and Its Environment Important Terms > Flashcards

Business and Its Environment Important Terms Flashcards

1
Q

Deindustrialization

A

The decline in the relative significance of secondary industry that tends to occur in advanced ‘service’ based economies.
Moving away from the secondary industry and moving towards tertiary/service industries.

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2
Q

Mixed economy

A

An economic system that combines elements of a free market (private enterprise) and state control and ownership of resources (public sector).

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3
Q

Monopoly

A

A firm that dominates a market with at least 25% market share.

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4
Q

Opportunity cost

A

Value of the next best alternative forgone.

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5
Q

Primary sector

A

Businesses that operate in industries that are concerned with agriculture, fishing and extraction of raw materials.

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6
Q

Private sector

A

The part of the economy operated by private individuals or privately owned business.

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7
Q

Privatization

A

The process of selling state owned (public sector) businesses to the private sector.

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8
Q

Secondary sector

A

Made up industries engaged in manufacturing products or construction.

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9
Q

Tertiary sector

A

Business activity that provide services for consumers and other business.

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10
Q

Corporate objectives

A

The long term goals of the corporation that give focus and direction to the business. These form the foundation for the strategic plans of the business

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11
Q

Corporate responsibility

A

The acceptance by an organization of responsibility to stakeholders for actions undertaken and decisions made in the name of the organization.

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12
Q

Dividend

A

Part of the net profit of a company that is paid out to shareholders

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13
Q

Ethics

A

A set of moral principles that a company might lay down for its employees to follow when working for the business and when decisions are taken.

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14
Q

Hierarchy of objectives

A

The aims and objectives of an organization are placed in descending order of strategic importance.

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15
Q

Mission statement

A

A published document that details the agreed common aims of a business so that all mangers and staff may work with a shared sense of purpose.

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16
Q

Objectives

A

The targets or outcomes that a business attempts to achieve.

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17
Q

Profit

A

Total revenue – Total cost (TR – TC)

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18
Q

Profit maximization

A

An objective that managers might establish for a business which requires the form to only take declines that maximise the profit made.

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19
Q

Social responsibilities

A

The accountability of business towards stakeholders other than shareholders, e.g. taking care of the interest of customers, local residents, employees and the environment instead.

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20
Q

Stakeholder

A

Individuals or groups that have a direct interest in the activities of a business.

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21
Q

Strategic objectives

A

Important long term goals of the business

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22
Q

Strategy

A

A long term plan of action, aiming to achieve a specific objective

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23
Q

Tactical decisions

A

Short-term decisions that may be taken by middle or junior managers to achieve strategic objectives.

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24
Q

Deed of Partnership

A

The legal agreement made between partners giving details of amounts invested, profit shares and the responsibilities of each partner.

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25
Q

Legal personality

A

This is given to companies on incorporation and gives them legal rights and responsibilities, treating them as separate legal entities in the eyes of law.

26
Q

Limited liability

A

The potential loss that shareholders would incur is restricted to their original investment in the company.

27
Q

Memorandum of Association

A

A legal document that contains the objectives, the amount of authorised share capital and the types of shares to be sold before a business can become an incorporated company.

28
Q

Partnership

A

A legal form of business organisation in which has tow or more owners. (Max 20)

29
Q

Private limited company

A

An incorporated business that is owned by shareholders but does not have the legal right to offer shares doe sale to the public. They are often family owned businesses.

30
Q

Public Limited company

A

An incorporated business that has the legal right to offer shares for sale to the public. They are often family owned business.

31
Q

Sole trader

A

An individual owning and operating a business on his/her own.

32
Q

Unlimited liability

A

Business owners risk losing all personal assets if the business fails.

33
Q

Cyclical unemployment

A

Unemployment caused by the fall in production output due to lower demand during recession.

34
Q

Structural Unemployment

A

Unemployment caused by a mismatch between the
skills that workers in the economy can offer, and the
skills demanded of workers by employers (also known
skills gap).
Structural unemployment is often brought about by technological changes as the many workers obsolete.

35
Q

Economic growth

A

An increase in national income level, leading to higher demand for goods and services

36
Q

Employment Acts

A

Laws passed to regulate contracts of employment, conditions of work and ways in which employees can be dismissed.

37
Q

External constraints

A

Factors outside of a manger’s control that may influence the chances of success of the business achieving its objectives.

38
Q

Gross Domestic Product (GDP)

A

The total value of output produced in a country in one year.

39
Q

Inflation

A

A sustained rise in the average price level, measured by the consumer price index (CPI).

40
Q

Infrastructure

A

The physical resources of a region such as post, transport, telecommunication and utility services that benefit the entire community.

41
Q

Interest rates

A

Cost of borrowing or return on savings

42
Q

Monetary policy

A

Action taken by the Government or The Central bank to vary the rates of interest or the supply of credit in an economy.

43
Q

Pressure group

A

An organization formed by people who share the same objectives and attempt to influence business or government decisions in order to achieve them,
e.g. Greenpeace.

44
Q

Recession

A

Falls in national income which leads to lower demand for goods and services.

45
Q

Diversification

A

The process of entering new markets and/or developing new products to reduce the risks of depending on one market/product.

46
Q

Economies of scale

A

The fall in average cost of production as a firm’s scale of operation increases.

47
Q

Franchise

A

A business that is based upon the purchase of a license to use the name, logo and products of another businesses.

48
Q

Horizontal integration

A

The merger of two firms – or takeover of one firm by another that are both operating in the same industry at the same stage of production.

49
Q

Joint venture

A

The setting ups of a business enterprise by two or more firms, often with a specific regional or product responsibility.

50
Q

Merger

A

A mutual agreement between business owners and managers to join two firms together to form one business entity.

51
Q

Rationalization

A

The process of reorganising resources to increase efficiency. This often leads to redundancies in an attempt to reduce business overheads.

52
Q

Synergy

A

The integration of two separate units lead to more successful operation with greater size and specialisation.

53
Q

Take-over

A

The purchase of shares in another business to gain control.

54
Q

Vertical Integration

A

Two firms (usually supplier and customer) joining together in the same industry but at different stages of production.

55
Q

Currency appreciation

A

A rise in the external value of a currency as measured by its exchange rate against other currencies.

56
Q

Exchange rate

A

The external value of a currency.

57
Q

Export

A

A good and service sold by a country to another

country.

58
Q

Globalisation

A

The trend towards free international trade and free movement of capital between nations.

59
Q

Import

A

The purchase of good or service from another country

60
Q

Import controls

A

Restrictions imposed by government to limit the value or quality of imports.

61
Q

Specialisation

A

Concentrating on one part of the production process.

62
Q

Tariff

A

A tax on an import.

H2 Management of Business (4 decks)

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